Ivory Coast faces uphill battle against counterfeit medicine

State injects billions to boost banking system

Irish Finance Minister Brian Lenihan has announced an extra 8.3-billion-euro state cash injection into the nationalised Anglo Irish Bank as well as government plans to buy 81 billion euros of toxic assets to prop up Ireland's troubled banking system.

AFP - Ireland pumped in billions of extra euros to prop up its troubled banking system Tuesday as its finance minister warned his "worst fears have been surpassed" about how recklessly bankers had behaved.

Brian Lenihan told a bad-tempered session of parliament that the state was buying 81 billion euros (109 billion dollars) of toxic assets from failing lenders and injecting an extra 8.3 billion euros into Anglo Irish Bank.

Although he gave no exact figures, he added the state will likely take a majority share in Allied Irish Bank -- currently 25 percent state-owned -- but remain a minority shareholder in Bank of Ireland, where it has a 16 percent stake.

Lenihan said that "truly shocking" information had emerged about the way Irish banks had behaved in the run-up to the global financial crisis.

"At every hand's turn, our worst fears have been surpassed," he said.

"Some institutions were worse than others. But the fact is that our banking system, to a greater or lesser extent, engaged in reckless property development lending. In too many cases there were also shoddy banking practices.

"The banks played fast and loose with the economic interests of this country."

Ireland's financial institutions have been hammered by a record 13-percent slump in the former Celtic Tiger economy and the bursting of a property bubble that has seen prices plummet by about 50 percent.

The biggest bail-out announced Tuesday will be for Anglo Irish which has already received four billion euros.

Lenihan said that in addition to the 8.3 billion euros, it needed as much as 10 billion euros extra in future. But he stressed that simply winding up Anglo Irish "is not and was never a viable option.

"The realisation of the costs involved and the wider disruption to the financial system would generate enormous instability for the state with unforeseeable but potentially long-lasting damage to the overall economy," he said.

The state is also to inject 2.6 billion euros into Irish Nationwide Building Society, effectively nationalising it.

Richard Bruton, finance spokesman for the main Fine Gael opposition party, said he was "truly shocked" at the scale of what Lenihan was asking people to accept.

"The decisions today will double the national debt at one stroke," he told RTE state radio.

The 81 billion euros of toxic assets are being bought by Ireland's National Assets Management Agency (NAMA), or so-called "bad bank," which was especially set up to hold and ring-fence the bad loans from the rest of the banking system.

NAMA said in a statement that it would buy between 14,000-15,000 loans with a nominal value equivalent to 81 billion euros from five Irish banks and building societies.

The first tranche of loans has a nominal value of 16 billion euros and will be bought for 8.5 billion euros, a steep average discount of 47 percent, it added.

However, the size of the discount NAMA will demand from banks for some of the loans being taken over -- known as the "haircut" -- is as much as 58 percent.

NAMA was created by the Irish government last year to use taxpayers' cash to purchase high-risk or toxic assets at a major discount from the nation's crisis-hit banking sector.

In its draft business plan last year, NAMA estimated it would be buying about 77 billion euros in loans -- equivalent to roughly a third of Ireland's gross domestic product -- at an average discount of some 30 percent.

Anglo Irish Bank, meanwhile, is widely expected to announce record losses for an Irish company when it unveils its annual results on Wednesday.